Thailand plans to cut borrowing to US$60b next fiscal year

Published Thu, Sep 22, 2022 · 06:24 AM

THAILAND plans to borrow a gross 2.23 trillion baht (S$85 billion) in the fiscal year starting Oct 1, about 3 per cent less than its target this year, as the South-east Asian nation rolls back Covid-related spending, according to people familiar with the matter.

The debt-raising will include 793.6 billion baht of fresh borrowing to meet the fiscal deficit and 1.44 trillion baht for refinancing and restructuring existing debt, the people said, declining to be identified before a public announcement.

The targets were discussed by the Public Debt Management Office with the primary dealers and market participants on Wednesday (Sep 21), they said.

Patricia Mongkhonvanit, chief of the debt office, couldn’t immediately be reached for comment.

The yield on benchmark 10-year government bonds rose 2 basis points to 2.94 per cent on Wednesday, extending the rally this year to 105 basis points. Foreign investors have pumped in a net US$4.1 billion into Thai sovereign bonds so far this year, even as the baht lost about 10 per cent to tumble to its lowest since 2006.

While the gross financing target looks comparable to the amount raised in the current fiscal year, “the net borrowing target is possibly lower by up to 18 per cent considering the larger maturity next year”, said Jennifer Kusuma, a senior rates strategist at Australia & New Zealand Banking Group in Singapore.

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The removal of local supply risk in the near term should help support the bond market in the face of short-term deteriorating demand dynamics, the Bank of Thailand’s gradual rate hiking cycle and rising global yields, Kusuma said.

The debt office said last month it will cut short-term borrowings to reduce costs after the central bank raised its key rate for the first time in more than 3 years.

The borrowing plan for the next financial year will include a maximum bond issuance of 273 billion baht in the October-December period, the people said. That’s more than the 263 billion baht raised from bonds in the July-September period.  

The debt plan for 2022-23 includes 1.09 trillion baht of sovereign bonds, 140 billion baht via bond switching, 540 billion baht of Treasury bills, 130 billion baht of savings bonds and about 34 billion baht in overseas borrowing. Promissory notes and term loans may make up about 301.4 billion baht, the people said. BLOOMBERG



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